ADNOC’s September OSPs mostly in line with market expectations: sources

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Abu Dhabi National Oil Co., or ADNOC, issued its September official selling prices which were deemed largely in line with market expectations, several sources told S&P Global Commodity Insights Aug. 4.

The producer set the September IFAD-based official selling price for its flagship Murban crude oil at $105.96/b, down $11.57/b from August’s OSP of $117.53/b, the company said in an Aug. 3 pricing letter.

The September OSP differential for Umm Lulu was set at 10 cents/b premium to the Murban OSP, down 5 cents/b from August prices, while the differential for Das Blend widened to minus 80 cents/b from minus 60 cents/b last month.

The September differential for Upper Zakum was set at a discount of $3/b to the Murban OSP, up 20 cents/b from the August price.

“Fair [prices],” said a trader with a South East Asian refinery. A Chinese refinery source indicated that the OSPs were “somehow OK”.

The prices of Upper Zakum largely reflect the spread seen between light sour and medium sour crude during the Platts Market on Close assessment process by S&P Global through July, traders said.

The spread between Platts Murban and Platts Upper Zakum averaged at $3.14/b through July, S&P Global data showed.

But mixed opinions emerged on the other light sour grades, namely Das Blend and Umm Lulu, given how OSP differentials for the two crudes have always had split opinions among market participants.

“UZ [Upper Zakum] seems ok. Das [Blend]/Umm Lulu still high [versus Murban OSP],” a trader in Singapore said.

Last month, September-loading spot cargoes for Das Blend were heard traded at a discount of around $1/b to the IFAD Murban price while cargoes for Umm Lulu were heard traded at discounts of around 15 cents/b to the Murban price, traders said.

However, some sources noted that market activities for Das Blend and Umm Lulu are typically much smaller compared to Murban and Upper Zakum.

“But volume [of Umm Lulu] is small and really market is not bothered,” a trader with a South Asian refinery said.

Murban pressured

Spot market sentiment this month has soured marginally amid concerns of weaker demand stoked by a potential economic recession while margins have also lost a bit of their luster, traders said.
Crude prices are beginning to edge lower and Murban will be no exception, sources said.
“IFAD is already showing that,” the trader with the South Asian refinery said.
So far in August, the October IFAD Murban versus October Dubai futures averages $8.05/b, down from an average of $12.25/b in July, the data showed.

More pressure could be piling up with light sweet WTI Midland, an often preferred alternative to Murban in Asia, increasingly finding a way into the region, traders said.

“WTI gives pressure to Murban this month,” the trader in Singapore said.

A contracting Brent/Dubai spread could also aid those barrels to move into Asia sooner, the trader in Singapore said.

At 10 am Singapore time (0200 GMT) Aug. 4, the October Exchange of Futures for Swaps, or EFS, was pegged at $6.36/b, down from a high of $8.59/b on Aug. 1, as per the data.

The EFS is often tracked as an indicator of North Sea low sulfur crude value versus Middle East high sulfur crude, and a narrower EFS makes crude priced against Dubai, less economically attractive compared to Brent-linked ones.

For now though, falling Murban prices could actually benefit trade for the grade when buying commences this month, another trader in Singapore said.

“[Murban] sellers should be happy. [Could] encourage people to trade other grades linked to Murban price,” the second trader said.

With ADNOC OSPs out in the open, focus is back on Saudi Aramco’s prices, expected this week, which could truly set the trend for how the market moves this month, various sources said.

“Now Saudi OSP is going to be [the] real market mover,” the trader with the South Asian refinery said.

Source: Platts

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